It’s becoming more apparent that leaving this mortal coil is one of the most expensive things you’ll experience, and no matter how hard you try, it can only be delayed and not avoided completely.
Funeral costs have risen constantly for the last decade and show no signs of slowing. The reasons why are almost irrelevant—emissions play their part, so does a lack of burial space in some areas, third party costs continue to rise and funeral directors, many of which are independent family businesses, have to keep up with the ever rising costs of running an SME in the UK.
In the end these costs will land on your doorstep, or more accurately, the doorstep of your family and loved ones. But there is something you can do to mitigate what could be a bill running into many thousands of pounds. The average cost of a funeral in the UK in 2016 is currently just under £3,700, an increase of just over 90 percent since 2004. It’s estimated that by 2025 the average cost of a funeral will just over £6,700, another huge increase.
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But, if you were to take out a prepaid funeral plan (not an insurance policy), you’d pay today’s prices and your family would have nothing to pay at the time of need. Additionally, you can detail your personal requirements such as music, readings, hymns, a religious or non-religious theme and remove the vast majority of the financial and emotional burden from your family and loved ones.
Prepaid funeral plans have been around in their current form since the early nineties and the market had grown steadily, albeit modestly until the last three to five years when the general awareness and acceptance of the concept started to take hold. Now there are an ever growing number of new providers and resellers jumping on the bandwagon.
The concept is simple in principal. The majority of mainstream funeral plan providers operate a Trust based plan. Each provider has two parts to their business, the company that operates the plan and handles of all the sales, marketing and administration and a separate Trust Fund managed independently which is where all your money as a plan holder is taken care of. The trust is invested and at the time of need it pays the funeral director for the funeral as per your plan.
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Who you choose to use is personal but it’s recommend that you take the following points on board when considering your plan provider:
1. DON’T use a plan provider less than 10 years old—they will still be learning what really works and what doesn’t.
2. DON’T buy on price alone, cheapest is not best when it comes to funeral plans.
3. DO ask about administration fees and commissions paid, some plan providers take £750 to £1,000 in fees from the price you pay for your plan, sometimes more.
4. DO ask for confirmation that your plan will actually be allocated to a specific funeral director. Some plan providers have up to 80 percent of their plans unallocated before the time of need.
5. DON’T allow yourself to be ‘sold’. Good plan providers won’t try to hurry or pressure you. If you’re uncertain, take time to reflect.
6. DO check cancellation clauses, if you decide to cancel your plan in the future some providers can charge up to 20 percent of your plan price, others range from £150 to £395.
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